Full Steam Ahead

Sure, you've heard it all before--how to start a business, what to expect, etc. But the question remains: What's it <i>really</i> like to start your own business. One entrepreneur shares his story about putting his startup's wheels in motion.

The rice fields spiraled below me. From the air, the flooded
paddies reminded me that I was entering a foreign and exotic land.
Although I had performed months of recon, I was unprepared for the
feeling of irreversible change. My whole future revolved around the
successful completion of my mission. I had left behind my home of
16 years in search of a golden future in this unearthly
place-Northern California. My comfort zone vanished into thin
air.

I had one suitcase, a duffel bag and a briefcase stuffed with a
laptop. My most sacred possession was draft 22 of a thorough
business plan full of information-painfully heavy, I mused, as the
rain slapped against the windshield a few hours north of
Sacramento.

This is not a story of blind luck, instant success, or starting
a business with seed money from a kindly uncle. This is about
starting a new national chain of retail stores called Victory
Mobility Centers with an old laptop, an idea, and the purchase of
two existing stores as a starting point. What I've learned on
my quest for business ownership could make you millions-or at least
save you from wasting time on a half-baked idea.

The Search

My journey started on a bleak Texas day in early January. For
nearly a decade, I have contributed or reported on the business
success of others through my writing and consulting. Suddenly, that
was no longer enough. I started searching through my stack of
Entrepreneur magazines for an answer to what my future would hold,
when I saw a blurb about Ability Center, a San Diego business that
sells mobility devices such as wheelchairs and minivans adapted for
the physically challenged. The business was growing at a rapid clip
and was in a position to help our aging population-a business that
makes you feel good about yourself. A smile crept across my face.
Days later, I was on a plane to San Diego to visit Ability Center.
That was three years ago.

The Workable Deal

We all need to find our "workable" deal. The hallmark
of an entrepreneur is the capacity to dream. Yet most of the time,
people seem to be content to wish for something. Wishing is what
happens when you buy a raffle ticket. The key to a more realistic
vision for success is to discern what is workable for you and what
isn't. Success depends on the concept, your team, the
presentation and your timing.

Working the workable deal means sweating the details and
producing a plan you can execute. Be realistic. If your team has
never worked in an ice cream store, don't pitch a plan for
global domination of the ice cream market.

The Pitch

It isn't wise to broadcast your plans, but our market will
grow by no less than 10 percent per year for 15 years. Current
customers are underserved by small operators who don't
advertise and are undercapitalized. The service helps the aging
with their needs for everyday living. There's no national
brand, and the whole market segment is about to bust wide open,
because baby boomers will fuel it with their decreased physical
mobility and unprecedented earning power. Our concept is a category
killer with the right people behind it. The day we close on the
acquisition of two of the industry's leaders, we will be the
fourth-largest company of its kind in the country. Two years from
now, we will be the largest in the nation.

What you just read is known as "the elevator pitch."
It's designed to attract attention to the value of your
proposition. If you can't articulate what your business is
about in one minute, you may never attract the talent or capital
you need.

The Setback

The meeting in San Diego would begin a year of frustration and
false starts. Many business owners love to be courted by potential
purchasers. The idea of selling and leaving the daily grind behind
is compelling. But when it comes to actually signing a deal, many
founders can't part with their babies. In San Diego, no amount
of cajoling, bonding or alcohol would create a workable deal. The
owner of Ability Center wouldn't agree to anything until I had
a few million dollars in the bank. Investors don't put millions
of dollars in the bank until you have a binding deal. This is the
conundrum for those without sufficient capital. I learned the
importance of creating a binding letter of intent early on-it gives
you time to raise capital and do due diligence. When you visit
potential investors, having this document shows you're
serious.

Without a binding letter of intent, my potential deal in San
Diego was dead. Then the phone rang. It was a consultant who had
worked with the owner in San Diego, and his message was simple:
"I scrutinized your plan. I feel your vision is right on, and
I want to work with you." I had my first team member. That was
two years ago.

Business Plan Do's

Explain the pain in the marketplace that your concept will
relieve

Accurately point out risks to your plan

State clearly how much money you need

Have an experienced team in place

Have a logical and sensible investor exit strategy

The Team, the Results & the Future

To raise capital, you need a plan and a team. I have to agree
with inspirational speaker Baggett Byrd when he says, "Show me
your friends, [and] I will show you your future." Great
advice, but all my friends are looking for their own seed capital.
My new partner and I don't have $4.6 million, but we did know
people we could talk to about joining us. We hit the road to find
another seller and more team members.

Consultants, accountants and lawyers will be your best
friends-as long as you pay them. In my case, I needed advisors with
great contacts, and technicians willing to work long hours for
free. To attract this kind of talent, you need a plan that has a
lot of blanks in the "Management" section.

Your goal at this point is to outline your vision and add people
who will propel each other to success. The qualities of the people
on your team will attract others. It also helps to create momentum
by adding top-notch talent.

One of our big breaks occurred when I approached C5 Partners
with draft 13 of our plan. C5 Partners is a Dallas consulting group
that helps potential hypergrowth companies prepare for financing.
C5 was excited about the idea, but I couldn't afford their
monthly retainer. I had to find a solution.

The Trade-Off

Amazingly, people who share your vision will help without
immediate return, as long as you're willing to share. I've
found that the people who are the most concerned about what they
can take from a deal are the ones who will frustrate the process or
drop out early when the workload is steep. Weaker players insist on
the most security upfront, because they fear their inadequacies
will be uncovered.

In the case of C5 Partners, I told them we could not pay their
retainer, and, if they wanted to be on board, it would have to be
for a piece of the equity. A week later, we had a signed contract,
granting them a big chunk of the company-but only if they
succeeded. That's when the real work began. That was 18 months
ago.

The Long Haul

Not long ago, I attended a workshop where one of the featured
speakers had won an Academy Award for best original screenplay.
"Yes," he said, "after 10 years of repeated
rejection, I became an over-night success."

In context, this statement was not only about perseverance, but
also about timing. Business investment goes through phases and
trends. Your timing must be right. For example, in 1999, if you
were not the champion of some Internet concept, capital firms
weren't interested. Today, investors are seeking strong
potential for a consistent return. If you show up with a scheme for
the Internet, it had better be an extension of an already proven
business model. Investment firms formed to handle high-tech
companies are now taking a closer look at low-tech businesses. So
if you have an old business plan on the shelf, it may be time to
dust it off.

The Results

After 18 months, draft 42 of our business plan has been
finalized and is ready for submission. I've spent $10,000 of my
own money and about $100,000 of my time. Every holiday for the past
two years has been spent in pajama bottoms with a bottomless cup of
coffee as my glassy eyes bore holes into my computer. My obsession
kept me in the office on Christmas. The consultants will permit no
shortcuts, evasive answers or uneducated conclusions. This is the
"work" in the workable deal.

We submitted our business plan to some A-list investors, and it
feels as if I just spent $110,000 on a lottery ticket that has a 50
percent chance of winning $13 million. I've pitched the project
to interested investor groups, and one group in particular is
scrutinizing the thoroughness of our thinking, preparing to make
their investment.

I am now in Northern California as the general manager of
Nor-Cal Mobility Inc., a store we have a binding contract to
purchase. The furniture in my quarters is made of cardboard boxes,
and my bed is a mattress on the floor, but I don't despair. In
fact, I feel empowered. The owner has also joined our team and
signed the sales contract, knowing full well that my checking
account had $2,500 in it at the time. He is subsidizing our
inevitable success, and I am helping him prepare for growth. Key
people in the industry have approached us and have expressed a
desire to join us. The seller's controller has burned the
midnight oil with me. The train has left the station, and there are
many who wish to ride with us.

The Future

I wish I could tell you that this story has a happy ending, but
I can't, because too many hurdles remain. In my years as an
attorney, I've seen fully negotiated deals fall apart at the
closing table. It's amazing what an adrenaline high this
journey has been. The harder you work on something worthy, the more
you appreciate it. Right now, our collective business dream is like
one of those trick birthday candles-many have tried to blow out the
candle, but it just keeps relighting itself.

The next step will be to negotiate with the investors about what
we must be willing to lose in order to use their cash. If that
doesn't work out, we will start again, because the only thing
more painful than discipline is the pain that comes from regret. It
would be crazy to let this vision die. I can see the day when the
funds hit our account and the morning we change the signs on the
storefront. They tell me that's when the real work begins.

Today, we have a phone conference with the newly formed board of
directors. Our recently appointed chairman of the board is Nathan
Morton, former chair and CEO of CompUSA. In the spirit of making
this deal a workable one, he has also agreed to defer his
compensation until we are funded. In a week, we'll hear from
our potential investors. Things are good. Could we have our check,
please?

Business Plan Don'ts

Make vague or unsubstantiated comments or claims

Exaggerate growth or income claims

Overcompensate your team or be greedy in allocating equity to
investors